Exporting to Iraq

Our southern neighbor Iraq, with a population of 40 million and rich culture, imports many products from Turkey. The economy of Iraq, which lacks solid foundations like Europe, is primarily supported by oil and oil products. Having experienced significant social disruptions throughout history, Iraq has thus far been unable to establish a sustainable economy. Due to its negative stance towards other countries in the last thirty years, Iraq has been commercially shaken but has recently decided to correct this attitude and be more open to development. Many investors from different countries wish to benefit from the advantages posed by Iraq's strategic location and have begun to take steps in this direction. For many years, due to its central location, Iraq has been a transit gateway for trade with many countries, and today it is working to regain its former dynamism.

As our tenth largest commercial partner, Iraq appears to be adopting different strategies in the upcoming times.

How to Export to Iraq?

Iraq is a country with relatively high commercial risks due to its strict foreign trade policies and rules. Still, with a large economy compared to its current situation, the country holds a considerable production power by controlling Middle Eastern oil. As a result, Iraq also has significant purchasing power. Firms wishing to export to Iraq from Turkey need to pay attention to these aspects. With a more accurate customer analysis and proper product selection, they can capture the desired market.

As ODS Consulting Group, we scan the risks for you and assist you in reaching your goals with the best marketing strategies.

What Companies Export to Iraq?

In exports, most of which are facilitated by land transport, cargo and logistics companies have reached significant levels. While many sectors provide a variety of products to Iraq, our transport companies greatly support this commercial partnership. According to the Turkish Exporters Assembly (TİM) data, a total of 12,000 companies exported to Iraq in 2019.

Various products including mainly food, textiles, furniture, machinery, and iron-steel products are being exported. The food and chemical sectors rank among the top sectors on the list.

What Documents and Regulations Are Required to Export to Iraq?

When exporting to Iraq, which has strict rules compared to other countries and lacks flexible working conditions, it is essential to pay attention to the necessary documents and proper product procedures.
• Iraq utilizes the International Organization for Standardization (ISO) in its export process. Necessary operations are carried out in collaboration with the Quality Control Organization (COSQC) tied to ISO. In accordance with these rules, you should control your products and ensure that the usage period is at least 70% at the time they pass through customs.
• There are certain requirements in product packaging processes. The product packaging and labels must contain writings in Arabic, the most widely spoken language in Iraq, or in English, the common language, and the correct expressions should be used.
• Food products must include statements specifying that no pork or pork fat is used, and there must also be indications that the slaughtering process is halal.
• The side effects of products must be written in Arabic.
• Some general export rules that are valid in other countries also apply to Iraq. For instance, you are required to establish a company and legally prove it to the Iraqi authorities and Turkey through documentation.
• You must establish an e-commerce site. Finding your target market via the internet has become easier in Iraq, where technological infrastructure is improving.
• To carry out micro-export procedures, you need to prepare the ETGB (Electronic Commerce Customs Declaration) document. You should arrange your products for shipment through authorized cargo companies according to their regulations.
• A commercial invoice is required.
• To avoid problems in customs and delivery to customers, you need to prepare your international cargo delivery documents. This process can be carried out through the relevant cargo company and other authorities.

What Are the Export Taxes to Iraq?

Iraq, which has no specific commercial agreement with Turkey, imposes customs tax obligations on exports. With the customs practice that came into effect in February 2019, customs tax rates have been classified. Previously varying freely between 0-100, customs tax rates have been categorized into a range of 0.5-30 for regulation. The methodology for calculating customs duty has been clarified, stating that the customs duty on goods classified in GTIP will be determined according to the formula [Volume (Ton/Kg/piece/litre, etc.) x Unit Reference Value ($) x Tax Rate = Tax Amount] and that, for imports to Iraq, tax will be calculated based on the invoice value for very few and specific products.

By a decision from the Ministerial Council of the Kurdistan Region of Iraq (KIBY), additional taxes have been determined for types I, U, and L iron profiles, corrugated packaging, polyethylene foams, and clinker rice in specified rates. The decision came into effect on December 1, 2020.

Iraq continues to apply two tariff customs taxes on Turkish exports. Additionally, there is no Value Added Tax (VAT) and Special Consumption Tax (SCT) in Iraq. In return for this regulation, high amounts of free taxation are applied to certain products (300% for alcohol and tobacco, 15% for travel tickets, 15% for cars, and 20% sales tax for mobile charging cards and the internet).

The standard Corporate Tax rate for those wishing to establish a company in Iraq is 15%. This rate changes to 35% for oil and natural gas companies.

What Products Are Exported to Iraq?

Many industries and business sectors have found their place as product markets in Iraq. We export many products from Turkey to Iraq. A wide range of products, primarily including food, textiles, furniture, machinery, and grains, find customers in Iraq. Based on the export data obtained in 2019, the products exported from Turkey to Iraq and their economic contributions are as follows:
• Grains, legumes, oilseeds, and their products = $1,078,514.96
• Chemical Substances and Products = $819,874.13
• Aquatic Products and Animal Products = $510,272.25
• Furniture, Paper, and Forestry Products = $720,875.67
• Ready-to-wear and Confection = $570,796.62
• Steel = $407,022.75
• Electronics = $354,160.83
• Iron and Non-Ferrous Metals = $266,457.29
• Fresh Fruits and Vegetables = $125,656.32
• Machinery and Parts = $247,481.95
• Fruit and Vegetable Products = $162,036.07
• Carpets = $109,490.34
• Automotive Industry = $210,284.88
• Air Conditioning Industry = $142,216.92
• Jewelry = $63,573.11
• Leather and Leather Products = $71,428.50
• Tobacco = $62,221.34
• Textiles and Raw Materials = $57,102.39
• Cement, Glass, Ceramics, and Clay Products = $90,865.24
• Mining Products = $62,696.31
• Dried Fruits and Their Products = $34,420.42
• Olives and Olive Oil = $22,008.75
• Defense and Aerospace Industry = $2,754.82
• Other Industrial Products = $3,145.98
• Hazelnuts and Their Products = $5,020.09
• Ornamental Plants and Products = $4,528.73
• Ships and Yachts = $462.71

What Is the Trade Volume Between Turkey and Iraq?

Turkey and Iraq are gradually strengthening their trade relations. According to data from the first 7 months of 2022, exports increased by 30% compared to the previous year. Jumping a rank, Iraq is where we export the most and seeks to increase the weight of our bilateral relations in global trade. The presidents of both countries have set a goal of achieving a trade volume of 20 billion dollars in the future. Aiming to achieve this goal, Turkey has begun to take the necessary export steps. Last year, 16% of our exports to Iraq consisted of precious stones and metals, which grew by an average of 33% and emerged as the fastest-growing sector. In 2021, while exports from Turkey to Iraq reached a value of 8.4 billion dollars, the trade volume between Turkey and Iraq was measured at 12 billion dollars in 2022.

Iraq is our 8th largest trading partner and the country from which we derive the highest net export gain.